Snapping a streak of 15 consecutive quarters with record earnings, John Deere announced Wednesday declines in both profit and revenues during the second quarter.
As a result, the company revised its sales forecast for the rest of the fiscal year downward.
The company announced profit of $980.7 million, or $2.65 per share, for the second quarter of 2014 ending April 30, down 10 percent from the second quarter of 2013.
The company reported $1.662 billion in net income for the first six months of the year, compared to $1.734 billion in the same period last year.
Worldwide net sales and revenues fell 9 percent to $9.948 billion for the second quarter of 2014. Sales and revenues are down 4 percent to $17.602 billion over the first six months.
The company reported equipment operations profit of $838 million for the second quarter and $1.381 billion for the first six months, compared to $953 million and $1.478 billion, respectively, last year. The company points to the same factors affecting operating profits, as well as a lower effective tax rate benefitting both periods.
Operating profit of the company’s equipment operations was $1.361 billion for the quarter and $2.252 billion for six months, down from respective profits of $1.663 billion and $2.500 billion in 2013. The company attributed the declines in both periods to lower shipment volumes, the foreign-currency exchange and product mix, partially offset by price realization.
Net sales of equipment operations were $9.246 billion for the quarter and $16.195 billion for the first six months of the year, down from $10.265 billion and $17.058 billion, respectively, for the same periods in 2013.
“We kept costs and assets well under control while successfully managing major new-product transitions associated with more stringent emissions standards,” Samuel R. Allen, John Deere chairman and CEO, said in a prepared statement. Allen also noted that the company’s construction and forestry and financial services operations improved in the second quarter.
Net sales of worldwide equipment operations declined 10 percent for the quarter and 5 percent for the first six months of the year, versus the same period last year. The company pointed to a price realization of 2 percent and an unfavorable currency-translation effect of 1 percent for both the quarter and six-month periods.
Equipment net sales in the U.S. and Canada were down 12 percent for the first quarter quarter and 6 percent for the first half of the year. Outside the U.S. and Canada, net sales outside the U.S. and Canada fell 6 percent for the quarter and 3 percent for the first six months of 2014, including unfavorable currency-translation effects of 2 percent for both periods.
Net income for the company’s financial services was $147.7 million for the quarter and $289.9 million for six months, versus $125.0 million and $257.9 million, respectively, last year. The company attributed quarterly improvement to credit portfolio growth, partially offset by higher selling, administrative and general expenses, and improvement in the six-month period to credit portfolio growth and a more favorable effective tax rate, partially offset by lower crop insurance margins and higher selling, administrative and general expenses.
Looking forward, the company said it expects equipment sales to fall 4 percent—accounting for an unfavorable currency-translation effect of about 1 percent—for fiscal year 2014, and net income is projected to reach $3.3 billion for the year.